Mining News

Manitoba faces ‘potentially deal-breaking uncertainty’ over treaty land claims in its mineral exploration sector according to an article by Martin Cash in the Winnipeg Free Press. This is compounding problems for the mineral exploration sector at a time when metal prices are low, investors are already avoiding the sector, and equipment is subject to an additional 1% sales tax.

According to the article, Mega Precious Metals –an exploration company working to develop a gold property called Monument Bay—have received an eviction notice from the nearby Red Sucker Lake First Nation. A temporary court injunction has since been issued which “authorizes the arrest of anyone obstructing, trespassing or creating a nuisance or ‘engaging in any act which interferes with the operations of the Monument Bay project’.”

The band has referred to the property in a news release as “a mineral-exploration company operating illegally in Red Sucker Lake First Nation traditional territory”. Yet Mega Precious Metals has been working with the band for years and in 2010 signed a memorandum of understanding (MOU) with them. Such MOU’s are often a precursor to more substantial industrial or impact benefit agreements which are formal contracts outlining the impacts, commitments and responsibilities of both parties as well as how bands will share in the benefits of mining such as through employment and economic development.

Ed Hubert, executive director of the Mining Association of Manitoba, cites frustration in Manitoba and notes that the province has lagged behind “Saskatchewan, British Columbia, Ontario and the Territories in establishing rules of engagement on issues such as aboriginal procurement, employment equity, industrial-benefit agreements and resource revenue-sharing”. According to Hubert “we need to sit down and talk about these things”.

Such discussions should not be delayed as this uncertainty affects not only Mega Precious Metals but also the attractiveness of Manitoba as a whole for mining investment. Mining exploration is globally mobile and the Fraser Institute’s annual survey of mining companies has consistently demonstrated the importance of stable, predictable and transparent regulations to attract investors. Uncertainty over disputed land claims can scare away exploration investment and survey results for Manitoba show that the province has declined in its attractiveness for investment in recent years.

In 2012/2013, 7 per cent of mining managers and executives participating in the Survey of Mining Companies indicated that they would not invest in Manitoba due to uncertainty concerning disputed land claims. A further 22% were strongly deterred and 27% were mildly deterred resulting in 56% of investors deterred to some extent due to this uncertainty. This is an increase from the Survey of Mining Companies 2011/2012 where 42% of respondents were deterred from investing in Manitoba due to uncertainty concerning disputed land. Manitoba is also becoming less attractive to mining exploration overall, dropping from the most attractive jurisdiction in the world for mining investment in 2006/2007 to the 21st most attractive jurisdiction in 2012/2013.

Mega Precious Metals has already spent millions on its project at Monument Bay and has not yet made a profit. Uncertainty caused by land disputes is now threatening not only this project, but also the future viability of an industry that has invested over $300 million on exploration in the province since 2011.